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Uncovered losses of Slovak banks increasing

The total assets of banks operating in Slovakia on March 31 amounted to 750 billion Slovak crowns, down 6.3% from the end of 1998. This decline was caused partly by the cancellation of a rule by the National Bank of Slovakia (NBS) on the foreign exchange positions of banks for monetary purposes, reported the NBS Bank Board on July 19.

An increase in the volume of classified loans is hurting the loan portfolio structure of the banking sector. Resources to cover the risky loans are growing slower than the volume of classified loans. As a result, the size of the uncovered loss is growing as well.

Five banks failed to meet the capital adequacy limit in the first quarter of this year. The growing number of non-performing loans and the deteriorating quality of the loan portfolios of banks is strongly related to the difficult financial situation of many Slovak corporate entities.

At the end of the first quarter of 1999, 26 banks operated in Slovakia's banking sector. Of this number, 24 were banks and two were branch offices of foreign banks. The share of foreign investors on the total registered capital of banks in Slovakia is approximately 37%.

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